Novel Coworking’s Response to COVID-19

Novel Coworking Response to COVID-19

At Novel Coworking, the health and safety of our clients and employees is our top priority. We are adhering to the recommendations of the World Health Organization and local health authorities regarding the prevention of the Coronavirus (COVID-19).

Updates for week of 3/16 – 3/20:

  • Novel Coworking will remain open this week. Our clients have 24/7 access as usual, but will need their keycard or fob to enter the building.
  • Our janitorial service will be increased and supervisors will be signing off on a cleaning & disinfecting checklist daily.
  • Conference rooms will be unlocked, and we encourage clients to use the Novel Coworking app to book time slots to avoid double-booking. We will not be charging clients for conference room time this week (3/16 – 3/20).
  • Our Center Staff will be handling all essential tasks. We understand clients may not feel comfortable coming into the business center to collect mail. Upon request and until further notice, Novel Coworking is willing to forward clients’ mail. We are happy to provide this mail forwarding service at no charge this week (3/16 – 3/20).
  • We recommend social distancing. If a client is a coworking member and would like to use a vacant office to avoid contact with others, for a limited time, we’ll open a private office for free if we have one available.

 

Across all Novel Coworking buildings, we are taking at minimum the following steps:

  • Making sure all common area surfaces are clean and hygienic
    • Cleaning kitchens, bathrooms, and common area desks and tables with disinfectant daily. Spray Lysol Disinfectant on common area door handles and building entrances/exits
    • Encouraging customers to disinfect personal office surfaces (desks and tables) and objects (telephones and keyboards) daily
  • Promoting regular and thorough hand-washing by employees, contractors, and customers
    • Putting sanitizing hand rub dispensers in prominent places around the center. Refill regularly
    • Displaying posters promoting hand-washing (attached). Deliver posters via app communication weekly
    • Making sure staff, contractors, and customers have access to places where they can wash their hands with soap and water
  • Promoting good respiratory hygiene
    • Displaying posters promoting respiratory hygiene (attached). Deliver posters via app communication weekly
    • Advising employees, contractors, and customers to stay home (or work from home) if they experience COVID-19 symptoms including low-grade fever (99 degrees F)

 

We will continue to monitor the situation closely and update protocol as needed. During these turbulent times, Novel Coworking will be working hard to limit the disruption to our valuable clients and their business.

Office Etiquette: How To Be A Better Deskmate

Office Etiquette: How To Be A Better Deskmate

When it comes to working in a shared office space, there are written and unwritten rules. Some rules may be obvious, others less so, but following them closely can lead to stronger professional relationships with your team and more fulfilling experiences at work.

Let’s explore the best ways you can become a better coworker through your office etiquette.

 

1. Be mindful of others

Although a shared office space is quite different from a traditional working environment, people are still trying to get work done. No matter what you’re doing, keep in mind how your work may be indirectly affecting (or annoying) others.

Taking an extensive phone or Skype call in an open area can be loud and distracting to others around you. Schedule a private office space or reserve a conference room ahead of time. If the call is last minute, step outside of the main area, use headphones, or lower your voice. The same goes for personal calls.

Stepping away from anyone who seems hard at work isn’t a bad idea. Noise isn’t the only thing to be aware of, consider how much space you’re using, or if your food may be giving off a strong odor. Being cognizant of how your actions impact others around you is one of the golden rules of open office space etiquette.

 

2. Communicate more clearly and openly

Shared office spaces are great for generating new ideas or sparking thoughtful conversations with others. Showing your face in the open area and working with your deskmates is a great way to find new business opportunities or just to meet new people at your office.

The key is being open to introducing yourself to new people, whether at a special event or by the coffee machine. Ask people about the work they do, any events they may be participating in, or just how their day is going. It’s not as hard as it seems.

That being said, do not be afraid to let others know if you have a deadline and cannot participate in an activity or a quick brainstorming session with a friend. Communication is key, even if you are not working directly with someone.

 

3. Invite passionate debates, avoid personal conflicts

Offices are naturally tense environments, and coworkers are bound to clash or argue. This isn’t necessarily a bad thing. In Patrick Lencioni’s 5 Dysfunctions of a Team, fear of conflict can lead to the avoidance of constructive debates. He writes:

“All great relationships require productive conflict in order to grow. Unfortunately, conflict is considered taboo in many situations, especially at work. And the higher you go up the management chain, the more you find people spending inordinate amounts of time and energy trying to avoid the kind of passionate debates that are essential to any great team.”

But when arguments turn personal, the conflict becomes less about the work and more about attacking each other. This should be avoided at all costs. If you are to have a passionate, even heated conversation with someone, make sure to keep it professional.

 

4. Come prepared and ready to work

No one likes working with someone who is two steps behind or constantly forgetting things. When going to a shared office space, be sure that you wear the proper dress code and have all the tools necessary to get your work done. If listening to music helps you focus, remember to bring your headphones. Some people even bring their own laptop stand, notebooks, pens and pencils, and laptop mouse.

Another thing to remember: just because it is called a shared office space does not mean that everything is meant to be shared. It’s important to always ask permission before using people’s chargers or equipment.

Check out our other post on tips for staying focused in a coworking space.

 

5. Stay clean and organized

Nobody likes a dirty and disorganized deskmate. No matter how busy you or your team become during the day, there’s no excuse for leaving a messy workstation.

Remember to take your belongings with you after using a desk. Clean, pack or discard any food or dinnerware after eating. Return any office supplies you may have borrowed from the building staff or your nearby deskmates.

Staying clean and hygienic is one of the top “unwritten” open office space rules to respecting the space and those around you.

 

6. Cultivate a culture of health and safety

Between all the deadlines and meetings, it can be easy to forget to take care of one’s health. We are quick to throw ourselves into working overtime or skipping lunch to stay productive. Help each other out by developing healthy habits and checking in on each other frequently.

Every once in a while, ask how your deskmate is faring with their work, and see if you can help take anything off their plate. If you see them particularly exhausted or depressed, talk to them, encourage them to take a break, or even leave early.

Never let work get in the way of someone’s well-being. The best office environments are the ones where everyone is excited to come in each day.

 

7. Respond to calls and messages more frequently

If you’re not in the office or working somewhere else, responsive communication is key. It ensures that you are both on the same page, even if you aren’t in the same room.

Whenever you receive a call, email, or text message, aim for a reasonable and consistent window of time for a response. For some that may be within one to three hours. The window is entirely up to you, but it’s essential you stick to it.

If you don’t think you’ll be able to respond in a timely fashion, create an auto-response email, such as when you are out for a vacation or in an important meeting. Doing so will help set expectations for your coworkers.

 

8. Be punctual to meetings

Be on time. Whenever you are late, even by a few minutes, you are signaling to someone that you do not prioritize their time. Traffic, late trains, and other obligations always get in the way, so prepare accordingly.

There’s an old quote that goes: “If you’re early, you’re on time. If you’re on time, you’re late.” That may seem like an extreme concept, but it may help you take punctuality more seriously. When in doubt, set an alarm and plan on being there fifteen minutes early, just in case anything comes up.

 

9. Praise hard work and major accomplishments

The day-to-day work can become so consuming that we forget to celebrate the small victories. But it’s vital to congratulate your coworkers on their work, whether they worked extensively on a certain project, or they pass a milestone such as a first anniversary.

Write or draw a quick note. Hand them a card. Or simply say directly. There are several ways you can show your appreciation without spending a fortune. A little can go a long way.

 

10. Master small talk, not gossip

Everyone has their own opinion of small talk, but the truth is that it’s an essential part of socializing with just about anyone. The best way to approach small talk is to be as genuine as possible. Be curious about your coworkers. Ask about their weekend, their plans for the night, their hobbies and interests outside of work.

There is a line you shouldn’t cross— make sure you never disparage or harass another coworker, even if they aren’t present. Nothing is worse than being known as the office gossip or creep. It lowers team morale and creates unfounded rumors. Rise above petty gossip or unwarranted advances and instead praise other coworkers genuinely.

 

Observing Shared Workspace Etiquette

The coworking experience depends heavily on the people who adhere to the open office space rules and etiquette. Those who follow the rules and etiquette, the ones who make and take every opportunity to treat others politely and keep their space clean, tend to work more efficiently and have a more satisfying office experience. Check out some of the office etiquette rules around the world in the infographic below.

International Office Etiquette Infographic

From Visually.

Just remember that your workspace is shared with others, so treat your deskmates’ space and privacy with as much respect as you would like in return.

Check out the various Novel Coworking locations available and discover how you can learn to love your office.

5 Tips to Rent Office Space in Houston

5 Tips to Rent Office Space in Houston

Pack your bags, because your next office space may be in the Bayou City. In 2018, Houston was listed as one of the top-rated cities to work in by Indeed, a testament to the city’s growing economy and diverse population.

If you’re thinking about finding a beautiful Houston office space for rent, then you’ve come to the right place. We’ll cover just how amazing it is to work in this city, along with some tips for finding your first space.

 

The benefits of renting office space in Houston

Having an office space in Houston can be a major advantage for you and your business. Here are just a few reasons why.

Infographic about Houston

Source: Sikich LLP

1. It’s an international hub.

Over the past few years, Houston has developed a reputation as a global city. Not only is it the most populous city in Texas (4th most populous in the country), but it is also one of the most diverse populations in an American metro area, with nearly one in four Houstonians who are born abroad. The city features 90 consulates, two international airports, and the second busiest seaport in the nation, making it a crossroads for the international business community. Getting an office in Houston would help create a sense of professionalism and productivity for foreign customers and locals alike.

 

2. It’s an industrial powerhouse.

Houston is known as the country’s “energy hub.” The city is responsible for one-third of the country’s oil and gas extraction jobs. Houston’s petrochemical industry is valued at 15 billion USD, the largest in the nation, while its manufacturing industry is valued at 100 billion USD, offering the most manufacturing jobs in the country. Finally, Houston is home to the Johnson Space Center, NASA’s largest R&D facility, and the second-largest employer and contractor in the area. Businesses in the energy or engineering industries would find themselves right at home in Houston.

 

3. It’s a creative oasis.

Los Angeles is probably the first city that jumps to mind when it comes to entertainment. But artists and creatives are increasingly migrating to Houston for its cultural environment. It happens to be one of the few cities with permanent, professional, resident companies in the four major art disciplines–opera, ballet, music, and theater– as featured by the Houston Grand Opera, Houston Ballet, Houston Symphony Orchestra, and The Alley Theatre and Theatre Under the Stars, respectively. The city also hosts about 21,000 arts and cultural programs each year. Creatives won’t find a better chance for networking and expanded reach for their brand outside of Houston.

 

4. You don’t have to pay state or personal income tax.

That’s right–although taxed at the federal level, you don’t have to worry about paying the state. Foreigners are equally taxed as US citizens, regardless of their residency (the substantial presence test can determine your tax status). For freelancers, contractors, and consultants, this small bump in pay can make a tremendous difference in one’s overhead costs.

Novel Coworking in Houston

 

Best areas to have an office in Houston

Houston is an ever-growing cityscape, so naturally, you want to find the ideal neighborhood for an office space. But instead of asking about the best area for an office, start by considering your own business needs. In particular:

Where are your clients located? This depends heavily on the nature of your business. If you service IT firms overseas, then ample physical space may not be crucial. On the other hand, if your customers happen to be actors or other entertainment-based contractors, you’d ideally want to be in a culturally relevant part of town.
Where do your team members live? Imagine the commute from your team’s perspective. How will they get to the office from their apartment or house? Some spaces in the city are more accessible via public transportation than others.
What do you need in an office? Many technology firms require a conference room to conduct remote meetings, while some content creators value the spaciousness of an office. Consider your top three qualities you need in an office to help in your decision making.

Novel Coworking, for example, has two locations in the Downtown Houston area: one in the Theater District, and one on Main Street. Both locations offer amenities that Novel Coworking is best known for: direct fiber internet, an espresso bar, conference technology, and much more.

Want to tour Houston from the comfort of your chair? Watch Island Hopper TV’s 15-minute video of the Downtown and Midtown Houston area.


 

Houston office space market statistics

How much does buying office space cost? How much do other companies pay for office space in Houston? And what about other amenities in the workplace? Here are a few quick facts and stats you should know if you’re looking to buy a Houston office space.

– The average monthly office price per person is $130/month (LiquidSpace)
– There are over 2,886,189 square feet of space throughout the city. (LiquidSpace)
– Employment increased to a 3.3% annual growth rate in the quarter ending May 2019. (NAI Partners)
– Citywide leases and renewals have increased, while office space vacancy has risen slightly. (Houston Business Journal)
– Houston’s Class A rentals per square foot have decreased in price between 2017 and 2018. (The Tenant Advisor)

 

How to find the ideal office space

1. Start by asking yourself how much space you will need. Do you have a large team working on multiple aspects of your company? You may want to look into an office suite or multiple private offices. Or maybe you only have one or two other team members, in which case a single private office, shared workspace, or coworking space is all you need. Solopreneurs will want to consider a dedicated desk, a desk that only they have exclusive access to in a coworking environment.

2. Start your search early in the year. Many tenants leave it last minute to find an office space, only to see it snapped up by an equally interested company. Start your search months ahead, and create a shortlist of the best spaces. Signing an agreement will take a few minutes, but research, tours, and moving will take weeks.

3. Tour the location in person. Most places will allow you to visit and walk through the spaces yourself. If this is an option, go for it! Not only will you be able to visualize your team within the space, but you can also get a general vibe of the area as well, something you can’t get online. Some things to keep in mind: how far the commute is, what amenities are available (such as meeting room access), nearby restaurants and points of interest, and anything else that might come to mind.

4. Ask the current tenants. Ask your friends and relatives for their opinion. They might already have a membership with one of the office spaces you’re considering, and they may be able to give you a more honest account of that environment. If you haven’t already, check reviews online and see what other people are saying. Weigh each person’s comment carefully— does their experience positively or negatively affect your ultimate decision?

5. Negotiate the terms. Prices will be fixed on certain things, but you can almost always negotiate the final signing fee depending on the terms of the contract. For example, signing longer-term agreements may result in a lower monthly rate. Be on the lookout for special events and location openings, where companies tend to offer a free month of rent or a similar deal.

Each person and business will have their own set of criteria and journey in finding the perfect office space. Remember, the most important thing is to review your own business’s needs and limitations and find a space compatible with your criteria.

Novel locations across the nation offer a variety of office space solutions, from private offices and coworking for 1-20 team members to office suites for teams with over 100 members. Visit our Novel Coworking Houston to learn more about what Novel Coworking can do for your business!

How To Describe Your Company Culture

How To Describe Your Company Culture

Defining Company Culture

Company culture doesn’t always get the attention as other areas of the business, but it’s just as important because it influences almost every discipline from operations to sales.

But what makes up the culture of a company?

In its essence, company culture refers to the shared set of values and ideals within an organization. It’s what brings character and personality to a brand name.

It can be influenced by:

  • Team members – what are their shared values and ideals? A culture is created by the people.
  • Mission statement – what is the organization’s collective goal?
  • Values and ethics – what is considered important or pointless? Acceptable or unacceptable? Right or wrong?
  • Environment – where does the company work? How do space and amenities affect people’s behavior and mindset?

 

Why is the culture of a company important?

Organizations in any industry experience change every day. The one constant is the company’s culture- the highest standard expected of each individual, and the values that glue everyone together. Company culture is more than a collection of words, its a collection of ideals.

Culture pervades every aspect of professional life, even though it’s not always apparent. For example, if an employee has a birthday, the way that the rest of the team treats that individual can represent the company’s culture. Similarly, if the team is hostile to one another, that may come out in customer interactions.

Whether it’s a simple interaction or a major initiative, culture plays an important role in unifying and directing people.

Still confused? Be sure to read our post on the importance of company culture.

 

How To Describe Your Company Culture

So how do you describe the culture of your business or the culture of the workplace? That might not be easy questions to answer, so we’ll cover a few steps on how to refine your culture messaging.

Brainstorm your brand’s top core values

Gather the key stakeholders of the brand in a room and come up with the top 20 values of the brand. Then narrow them to 10. And then again to five, until you have three left. While the others are still important, focusing on three main values will be easier to embed in the brand’s identity.

Start with the team

Find people that aren’t just qualified, but exemplify the brand’s core values. In most cases, you can train the individual to become proficient with a certain program or process, but you can’t train them to follow core values. During the interview process, picture how that person might behave with the team or under pressure. Would you still hire them?

Check out our tips on finding the best talent for your company.

Get down in the trenches

The best way to learn about the top values of your company is not just to ask, but to observe. Watch your team at work or at events and try to find the best aspects of their personality. Chances are these personalities and traits are what influence your current culture.

Listen to feedback

And not just to your team, but to your customers and partners as well. Read the reviews (as hard as that may be) on Google or Amazon, or whatever website your business may be rated on. What do others say about how your team’s interactions? Criticism can be difficult but can also be opportunities for change.

Measure, Evaluate, Revisit

It’s not enough to write down the values, you have to actually uphold them! Set milestones to check in with your team and see how closely the values are being followed. Send out anonymous surveys to get real opinions on how well the values are implemented, and how they might be improved. Use that feedback to build upon the values you created.

 

10 Attributes to Assess Your Company Culture

  1. Communication – The interactions between your team is in itself an example of the company culture in effect. Observing how your team discusses both professional and personal matters can give you a better sense of how the culture is implemented. If the culture is creative, collaborative, and upbeat, chances are that interactions at work will reflect those values.
  2. Feedback – Praise is all well and good, but if you really want to measure a culture’s efficacy, you must stay cognizant of how the company handles even the most critical feedback. Companies with well-realized cultures understand how to respond and act on criticism while staying consistent with the brand’s voice and personality.
  3. Goals – Culture is as much about setting objectives and creating plans of action as it is about how people interact. Some cultures place high importance on excellence and prestige, while others are about moving fast and innovating.
  4. Learning opportunities – Learning shouldn’t stop after school. In fact, companies have a responsibility to encourage its employees to expand their knowledge base. Unilever, the global consumer goods brand, even goes as far as to offer tuition reimbursement. This has lead many of their employees to get degrees in higher education for marketing, entrepreneurship, management, and more.
  5. Purpose – Organizational culture is heavily rooted in meaning. Without it, the company’s employees would not have a reason to come in each day, let alone stay long term. A good way to test whether your company’s purpose is clearly conveyed is to ask every person on the team what they believe the purpose is, and how they interpret it. Depending on the responses, you may have to fine-tune the language to ensure it is clear as it is inspiring.
  6. Decision Making – Culture can also dictate the best course of action to take when faced with a certain dilemma. Nordstrom, the luxury department store chain, defines their philosophy in a simple way: “Use your own initiative to provide customers with exceptional levels of service. You’ll never be criticized for doing too much for a customer, only for doing too little.” While other brands force adherence to a rigid process, Nordstrom employees are encouraged to be their selves, as long as it benefits the customer in some way.
  7. Responsibility – Everybody should be accountable for something within an organization. To understand why, look no further than Apple’s example. For any project or initiative, there is a DRI (Directly Responsible Individual). Whenever there is an issue, a bottleneck, or a general question, the DRI is the person to seek out. The DRI ensures everything stays efficient and that communication stays as clear as possible.
  8. Teamwork – Collaboration is often the key to a happier and more successful time in the workplace. You would be hard pressed to find a culture that doesn’t involve teamwork and collaboration somehow in their values. How well does your team mesh together? What is their chemistry like? How can you encourage them to work together even more?
  9. Trust – Teamwork, communication, and respect… none of these values would even be possible without first having a shred of trust for your coworker or leader. How much does your team believe in the strengths of one another? Trust forms the foundation for any social interaction, especially in the workplace.
  10. Adaptability – Cultures that are set in stone do not age well. The world today is very different than it was ten years ago, twenty years ago, and it’s vital that a company culture is continually revisited to be relevant to the times. Your company culture should have an open mindset, open to change and new developments, if it truly wants to stay competitive.

 

20 words to describe company culture

Below are a few words used by companies to describe their culture in a positive light:

  1. Lean
  2. Flexible
  3. Collaborative
  4. Rewarding
  5. Innovative
  6. Nurturing
  7. Motivating
  8. Inclusive
  9. Autonomous
  10. Curious
  11. Nimble
  12. Engaging
  13. Fun
  14. Fast-paced
  15. Exciting
  16. Professional
  17. Creative
  18. Transparent
  19. Sustainable
  20. Empathetic

 

A Higher Standard

Company culture and values act as the north star for a business, guiding the team during tough times. It’s easy to shrug off company values as a low priority item, but doing so only leads to further ignorance and conflicts in the workplace.

Take the time to make the company culture a priority. The lasting effects of a well planned, fairly enforced value system can cause ripples beyond the business and beyond the workplace.

Be sure to read our article on the 8 must-read books for 2018.

Follow Novel Coworking’s blog and social media for more resources and guides for entrepreneurs and startups!

How Much Should Startups Pay for Office Space?

How Much Should Startups Pay for Office Space?

Any hopeful startup will want a space that inspires productivity and creativity. That’s why finding a suitable but affordable location is often a top priority for new business owners.

But exactly how much should a startup pay for an office or coworking space? Ideally, the minimal amount, as they typically have other expenses such as labor, licenses, equipment, and more.

In Novel Coworking’s first post for the year, we’ll cover what every entrepreneur should know about paying for their startup’s office space.

 

How much does it cost to rent office space?

Since every location’s office market and vacancy rates are different, there is no single answer for how much office space rent costs. Instead, there are a number of factors that affect the price, including location, workspace type, and additional services and amenities.

As with any other commercial real estate, the value of the space is largely dependent on location. Metro areas like New York charge substantially higher monthly rent per square foot than a city like Seattle. According to thesquarefoot, San Francisco is among the most costly cities (approximately $65.16 per sqft), while Atlanta is the most affordable (approximately $20.97 per sqft).

Office Space Rent by square foot across different cities

 

Average Office Space Rent per Square Foot by City

City Dollar Price per Square Foot Novel Coworking Building
Washington, DC $595 Dupont Circle
Boston, Massachussets $550
Austin, Texas $486
Tulsa, Oklahoma $421
Raleigh, North Carolina $290
Denver, Colorado $284 16th Street, Trinity Place
Dallas, Texas $271 Katy Building
Chicago, Illinois $255 River North (Superior), River North (Huron), The Loop, Wacker, West Loop
Atlanta, Georgia $239
Nashville, Tennessee $217 5th Avenue
Sacramento, California $216
Philadelphia, Pennsylvania $207
Baltimore, Maryland $202
Salt Lake City, Utah $187
Charlotte, North Carolina $177 Uptown
St. Louis, Missouri $168
Minneapolis, Minnesota $158 LaSalle Building
Kansas City, Missouri $152 Kessler Building
Pittsburgh, Pennsylvania $140 Golden Triangle
Milwaukee, Wisconsin $100 Cathedral Square
Columbus, Ohio $61 Hooper Building

Another consideration to be made is the type of workspace your business will need. For sole proprietorships or small teams, a single office room may be enough to accommodate the company, at least at the start. For much larger businesses or rapidly-growing startups, an office suite may be more appropriate.

Finally, startups must also factor in the additional expenses tied to office spaces, which may include a reception desk, maintenance and cleaning staff, mail delivery service, Internet, and parking space. Fortunately, when business owners rent with Novel Coworking, their offices come fully furnished with fiber internet and WiFi, as well as many on-site amenities. The all-inclusive pricing covers the little things that business owners may overlook, such as mail service, security, and utilities.

 

How to calculate the optimal office space cost

You may be curious to learn how much of your business’s revenue should be allocated to rent. Here are the prices you can expect to pay based on Novel Coworking’s own offerings.

Office Space Type Price per employee per month
Virtual Office $59 – $100
Coworking environment, or Dedicated Desk $100 – $250
Private office or class B office building $300 – $500
Office suite $3,000

Typically, you’ll need to first consider how much space you need per employee, and then whether you’ll pay monthly or yearly. From there, you simply multiply the square footage (space) by the cost per square foot (price) and then by 12 (months).

 

Where do I find office space for rent?

When you’re ready to make the jump and rent office space for your business, Novel Coworking has your back. We offer beautifully designed spaces in major cities at competitive rates. Each location comes with a community manager and on-site staff, as well as useful amenities and services such as hi-speed Wi-Fi, a private conference room, a fully-stocked kitchenette, beer on tap, an espresso machine, and much more. Since these amenities are provided, you can avoid the additional costs that can come with renting a traditional office space.

Our office spaces come fully-furnished with enough room for your equipment and your team. Prices for office spaces start at just $299 per month.

For larger businesses, our office suites can accommodate teams of 10 – 100 people. Prices for office suites start at $2,999 per month.

And for freelancers or solo entrepreneurs who don’t need a private room, our coworking space is all you need to get started. Our coworking spaces start at just $99 per month.

 

Curious to learn if there’s a Novel Coworking in your area? Visit our ever-growing list of locations today to learn more. You’re one step closer to finding the perfect space for your business.

Risk vs Uncertainty: What it Means for your Business

Risk vs Uncertainty: What it Means for your Business

Business professionals are no stranger to risk and uncertainty. Whether it’s reaching out to a new client, or releasing a new product, risk and uncertainty influence every business decision. They can push a startup to innovate faster, or bankrupt businesses that fail to plan accordingly.

But what are the differences between the two concepts? Are they similar, or more different than people think?

 

The Difference Between Risk and Uncertainty

Risk

Risk is defined as the possibility or probability of an unpleasant or undesirable event.

In business, risk might suggest the potential loss of money, time, or information. Most importantly, risk can be calculated or measured. Entrepreneurs can use market data to calculate whether a new product may be worth introducing. Accountants can use balance sheets to measure the profitability of certain stores. Calculated risk can be beneficial, as risk takers can also generate significant returns.

 

Uncertainty

On the other side, there’s uncertainty. In contrast, uncertainty involves situations with unknown variables, information, and outcomes. Uncertainty cannot be measured or calculated.

Since uncertain events are unique and difficult to plan for, they come with even greater downsides for unprepared businesses. During the dot-com era, companies invested heavily in expensive domains before understanding their value. When the bubble finally burst, several companies disintegrated, and thousands of employees laid off.

The main takeaway from these two concepts: risk can be measured and predicted, while uncertainty cannot.

 

Examples of Risk and Uncertainty

Here are a few examples of risk and uncertainty in the business world:

  • Risk is when an online clothing store decides to sell a new line of clothing, based on customer analysis. Uncertainty is when that same clothing store introduces a new, unrelated product without research, such as a new furniture line.
  • Risk is when a company moves their processes and data to the cloud. Uncertainty is when a major outage affects multiple servers across the nation.
  • Risk is when an ad agency opens an office in a new country. Uncertainty is when the country enters a recession.

 

Risk Management: How to Plan for High-Risk Events

Fortunately, risk is something that can be predicted and planned for ahead of time. Gary Patterson’s Million Dollar Blind Spots, outlines a simple but repeatable process for risk management:

  1. Identify risk – Spot the risk early through research and historical analyses.
  2. Assess the probability – Evaluate all the factors involved, including the likelihood of positive and negative outcomes
  3. Make a cost-benefit analysis of alternatives – Measure the pros and cons of each decision you could take.
  4. Choose a response
  5. Evaluate results – How did the chosen action impact the business?
  6. Ongoing monitoring – Risk events should be constantly checked for changing circumstances. In some cases, risk aversion may be the best option.

While uncertainty cannot be measured, the same approach may be taken in addressing related tasks and challenges. While a recession cannot be predicted, a business can take steps to protect the future of its employees and customers.

 

Turning Risk Into Opportunities

Risk and uncertainty surround every business. Weighing options and outcomes, and deciding the final action as a team is just one way a business can remain vigilant. With enough practice in risk analysis and assessment, risk turns from an obstacle into a challenge. Risk forces startups to mature and innovate faster through competition, and rewards entrepreneurs with greater experience of the market and industry. Risk can’t be avoided, but when businesses learn to prepare, risk can open up new business opportunities.

 

Conclusion

Risk vs Uncertainty

The main differences between risk and uncertainty can be summarized by control and predictability. Risk can be measured, and therefore, controlled. Changes in sales because of the season can be predicted and planned. This is why risk analysis or risk assessment can be important for a business’s strategic development. Calculated risks can lead to great rewards.

Uncertainty on the other hand cannot be quantified or controlled. For example, a new local competitor can have unpredictable effects on your own sales. You cannot measure uncertainty, you can only deal with uncertainty. This is why we look for certainty as much as we can: the more certain future events are to take place, the better a business can prepare.

Need help with preparation? Read our 5 tips on business planning.

Addressing risky situations requires courage and leadership. Learn how to develop those skills.

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